It has long been held that one of the biggest reasons for the invasion of Iraq was to carve up the oil by the oil industry. A new book titled Fuel on the Fire by Greg Muttitt exposes the link between the big oil companies and the invasion through a series of leaked memos.

Plans to exploit Iraq’s oil reserves were discussed by government ministers and the world’s largest oil companies the year before Britain took a leading role in invading Iraq, government documents show.

Graphic: Iraq’s burgeoning oil industry

The papers, revealed here for the first time, raise new questions over Britain’s involvement in the war, which had divided Tony Blair’s cabinet and was voted through only after his claims that Saddam Hussein had weapons of mass destruction.

The minutes of a series of meetings between ministers and senior oil executives are at odds with the public denials of self-interest from oil companies and Western governments at the time.

The documents were not offered as evidence in the ongoing Chilcot Inquiry into the UK’s involvement in the Iraq war. In March 2003, just before Britain went to war, Shell denounced reports that it had held talks with Downing Street about Iraqi oil as “highly inaccurate”. BP denied that it had any “strategic interest” in Iraq, while Tony Blair described “the oil conspiracy theory” as “the most absurd”.

But documents from October and November the previous year paint a very different picture.

Five months before the March 2003 invasion, Baroness Symons, then the Trade Minister, told BP that the Government believed British energy firms should be given a share of Iraq’s enormous oil and gas reserves as a reward for Tony Blair’s military commitment to US plans for regime change.

The papers show that Lady Symons agreed to lobby the Bush administration on BP’s behalf because the oil giant feared it was being “locked out” of deals that Washington was quietly striking with US, French and Russian governments and their energy firms.

Minutes of a meeting with BP, Shell and BG (formerly British Gas) on 31 October 2002 read: “Baroness Symons agreed that it would be difficult to justify British companies losing out in Iraq in that way if the UK had itself been a conspicuous supporter of the US government throughout the crisis.”

The minister then promised to “report back to the companies before Christmas” on her lobbying efforts.

The Foreign Office invited BP in on 6 November 2002 to talk about opportunities in Iraq “post regime change”. Its minutes state: “Iraq is the big oil prospect. BP is desperate to get in there and anxious that political deals should not deny them the opportunity.”

After another meeting, this one in October 2002, the Foreign Office’s Middle East director at the time, Edward Chaplin, noted: “Shell and BP could not afford not to have a stake in [Iraq] for the sake of their long-term future… We were determined to get a fair slice of the action for UK companies in a post-Saddam Iraq.”

Whereas BP was insisting in public that it had “no strategic interest” in Iraq, in private it told the Foreign Office that Iraq was “more important than anything we’ve seen for a long time”.

BP was concerned that if Washington allowed TotalFinaElf’s existing contact with Saddam Hussein to stand after the invasion it would make the French conglomerate the world’s leading oil company. BP told the Government it was willing to take “big risks” to get a share of the Iraqi reserves, the second largest in the world.

Over 1,000 documents were obtained under Freedom of Information over five years by the oil campaigner Greg Muttitt. They reveal that at least five meetings were held between civil servants, ministers and BP and Shell in late 2002.

The 20-year contracts signed in the wake of the invasion were the largest in the history of the oil industry. They covered half of Iraq’s reserves – 60 billion barrels of oil, bought up by companies such as BP and CNPC (China National Petroleum Company), whose joint consortium alone stands to make £403m ($658m) profit per year from the Rumaila field in southern Iraq.

Last week, Iraq raised its oil output to the highest level for almost decade, 2.7 million barrels a day – seen as especially important at the moment given the regional volatility and loss of Libyan output. Many opponents of the war suspected that one of Washington’s main ambitions in invading Iraq was to secure a cheap and plentiful source of oil.

Mr Muttitt, whose book Fuel on the Fire is published next week, said: “Before the war, the Government went to great lengths to insist it had no interest in Iraq’s oil. These documents provide the evidence that give the lie to those claims.

“We see that oil was in fact one of the Government’s most important strategic considerations, and it secretly colluded with oil companies to give them access to that huge prize.”

Lady Symons, 59, later took up an advisory post with a UK merchant bank that cashed in on post-war Iraq reconstruction contracts. Last month she severed links as an unpaid adviser to Libya’s National Economic Development Board after Colonel Gaddafi started firing on protesters. Last night, BP and Shell declined to comment.

* Foreign Office memorandum, 13 November 2002, following meeting with BP: “Iraq is the big oil prospect. BP are desperate to get in there and anxious that political deals should not deny them the opportunity to compete. The long-term potential is enormous…”

* Tony Blair, 6 February 2003: “Let me just deal with the oil thing because… the oil conspiracy theory is honestly one of the most absurd when you analyse it. The fact is that, if the oil that Iraq has were our concern, I mean we could probably cut a deal with Saddam tomorrow in relation to the oil. It’s not the oil that is the issue, it is the weapons…”

The decision in Cyprus to rob depositors was always going to have a negative outcome. The following story from ZeroHedge should come as no surprise that worried UK expats are looking to move their funds away from countries that have perceived banking weaknesses. We clearly have entered a new era which can only have a positive outcome for precious metals as a way to preserve your wealth from confiscation.

UK’s deVere advisory group reports, “more and more expats in Spain, Italy, Portugal and Greece are now not unreasonably worried for their deposits in these countries,” and are seeing a “surge” in the number of British expats seeking advice about moving funds out of eurozone’s most troubled economies. As EUBusiness reports, “Whether the institutions like it and accept it or not, there is a real risk of a major deposit flight from these countries as people feel their accounts could be plundered next.” It is hardly surprising obviously (as we noted earlier the bid in German bunds) but we fear this escalation in cash exodus from the periphery will increase the need for a broader EU capital control scheme sooner rather than later.

Via EUBusiness,

Independent financial advisory company deVere Group on Tuesday reported a “surge” in the number of British expats seeking advice about moving funds out of some of the eurozone’s most troubled economies following the Cyprus bailout deal.

According to deVere Group chief executive Nigel Green, “more and more expats in Spain, Italy, Portugal and Greece are now not unreasonably worried for their deposits in these countries.”

He added: “Over the last week, since the messy deal to bailout Cypriot banks began, our financial advisers in these areas have reported a significant surge in enquiries from expats who are looking to safeguard their funds in other jurisdictions which are perceived to be safer.

“Whether the institutions like it and accept it or not, there is a real risk of a major deposit flight from these countries as people feel their accounts could be plundered next.”

…

Jeroen Dijsselbloem, who heads the Eurogroup of finance ministers, said the costs of bank recapitalisations should not fall on tax payers, but on bondholders, shareholders and, if necessary, uninsured deposit holders.

The Bank of England will be under pressure to unleash further emergency measures this week amid signs the UK is on course for an unprecedented triple-dip recession.

A shock fall in manufacturing activity in February helped shorten odds that the Bank’s nine-strong Monetary Policy Committee (MPC) will push the button on a further £25 billion of quantitative easing (QE) – also known as money printing – when they meet on Wednesday and Thursday.

Last month’s MPC minutes saw governor Sir Mervyn King and Paul Fisher join previously lone voice David Miles in calls to restart the printing presses.

Interest rates, which have remained unchanged at 0.5% for four years, will also be in the spotlight after Bank of England deputy governor Paul Tucker told MPs on the Treasury Committee that he had put negative interest rates up for consideration.

While he admitted it was an idea that needed to be thought through carefully, the Bank is expected to look for other measures to kick-start the UK economy, which has weaved in and out of recession since the 2008 banking crisis.

More QE looks to be the inevitable solution.

Alan Clarke, UK and eurozone economist at Scotiabank, said: “The recent noises from MPC members suggest that the MPC want to do something, but it is not yet clear what. The default policy tool has tended to be more QE and a £25 billion expansion at this week’s meeting seems to be the most likely outcome.”

But Howard Archer, chief UK and European economist at IHS Global, said he thought the Bank would hold fire on more QE at its March meeting, partly because the recent sharp weakening of the pound was stimulative in itself.

He said: “Furthermore, there is a danger that doing further QE at a time when sterling is already under serious downward pressure could cause the pound to fall too far too fast which would be both destabilising and perhaps over-stoke inflation risks.”

On Friday the pound dropped below 1.50 US dollars for the first time in more than two-and-a-half years.

Philip Shaw, chief economist at Investec, said that while he thought it was likely the MPC would keep policy on hold, the weak figures gave the case for further QE “a certain degree of extra momentum”.

British water companies are evading millions of pounds in tax by the fraudulent method of getting loans from their owners abroad and listing themselves as under debt.

Following a public outcry over billions of pounds of corporate tax avoidance in Britain, involving names such as Google and Starbucks, research group Corporate Watch said that six British water companies have taken out high-interest loans from their owners through the Channel Islands stock exchange so that they could dodge tax using a legal loophole that reduces taxable profits in proportion to interest payments abroad.

That means their owners get fully untaxed profits from Britain by pretending that their subsidiaries in the country are under debt.

According to Corporate Watch, the six water companies of Northumbria, Yorkshire, Anglia, Thames, South Staffs and Sutton and East Surrey have got £3.4 billion in loans from overseas.

The group said the Northumbrian case is the “most brazen” as it has promised an 11 percent interest on a loan of over £1 billion from a Hong Kong-based group that belongs to Li Ka-shing, the world’s ninth-richest person.

The situation also directly affects British tax-payers who should foot the bill for the high-interest loans taken out by water companies.

Corporate Watch said water companies could secure loans with much lower interests if they were government-run adding the current situation is costing British consumers an additional £2 billion a year.

Royal Bank of Scotland Says Worst Economy Since Before Queen Victoria Was Crowned

Ministers today admitted Britain is facing “very, very grave difficulties” after figures showed the economy did not grow at all in 2012.

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Economists from the Royal Bank of Scotland said the last four years have produced the worst economic performance in a non post-war period since records started being collected in the 1830s.

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“It’s the worst economic performance since at least 1830, outside of post-war demobilisations,” he told The Daily Telegraph. “It’s worse than the 1920s, it’s worse than the Great Depression.”

He said the economy has been “heading this way for a long time” because of the scale of the problems that came to a head in the 2008 financial crash.

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The top economist at RBS, which is mostly owned by the Government, said it is difficult to recover when much of the world is facing similar problems.

“It’s the scale of what happened in 2008 but also the build-up to that,” he said. “Compared with other recessions [like in the 1980s and 1990s], this is happening all over the world. There’s not a quick and easy way to export your way out of this.”

Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.

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A startling statistic for any economy that only 1 in 4 (16-74 year olds) is working fulltime. The future for the UK seems to be a move from fulltime employment to part-time, temporary or simply unemployment. Certainly not encouraging.

45% of all those currently in work don’t have full time permanent jobs, according to this month’s ONS labour market data .

While that 45% number reflects a reality in the UK Labour market highlighted by The Slog in previous posts, the cumulative result of adding up all the anomolies of our economy’s inability to employ people paints a very bleak long-term picture indeed.

The ONS also tells us that 22.4% of adults aged 16-64 are economically inactive. So that doesn’t include the retired…although of course some of them will be in the 45% of part-timers – thanks to the last fifteen years of Westminster policy shrinking their pension values.

But let’s start from one simple assumption: that very few people over 75 beyond Rupert Murdoch are still working. That’s 9.2% of all adults….but generously leaving out the 6.5% aged 65-74 entirely.

The aggregate comes to a staggering 76.6% not in a full time job. Only one adult in four – at the most – enjoys full-time employment in the United Kingdom.

For the life of me, I cannot understand why the statisticians are scratching their heads, and asking why unemployment is static or falling in the deepest recession for eighty years. The simple reality is that employment is changing: from long-contract, full-time career work to zero contract, short-hours part time or freelance work.